Never before have world markets been so integrated. And yesterday's
concerted interest rate cuts by central banks in the United States and
other countries from Britain to China was a signal that the financial
crisis rippling around the globe has grown too big for any one of them
- even the US Federal Reserve - to contain on its own.

It also could mark the start of an effort to overhaul the global
financial system conceived at the 1944 summit in Bretton Woods, N.H.,
which set the rules of international commerce for industrial countries.

That model, developed in an era of slower communications and simpler
financial transactions, has proved inadequate to govern today's rapid
flow of capital across borders. The World Bank's president, Robert
Zoellick, this week called for a "new multilateralism."

"We're going to have to build new international financial
institutions," said Joseph L. Bower, a professor at Harvard Business
School. "Bretton Woods was relatively primitive. We live in a world
where trillions of dollars are moved around the globe daily. No one at
Bretton Woods imagined that."

The alternative to a new trade model could be a rollback of global
business as the voices clamoring for financial controls and trade
barriers grow louder.

"At a time of recession, a lot of people will want to look inward,"
said Bruce R. Magid, dean of the Brandeis International Business
School. "We may see a move toward more protectionism. On both the trade
and the capital side, there are going to be second thoughts about the
free flow of goods and currency."

Critics of global trade and finance, long a vocal minority in many
countries, including the United States, have based much of their
opposition on such historical factors as job migration. Now they see
their cause gaining momentum as lawmakers push for tougher oversight
and financial restrictions to stem the mayhem in world markets. US
Representative Barney Frank, Democrat of Newton, has called for
stepped-up regulation of investment banks and other financial
institutions.

"There's going to be a large push for re-regulation," said Lori
Wallach, director of Public Citizen's Global Trade Watch, a policy
advocacy group in Washington. Wallach said trade pacts have undermined
safeguards for workers and consumers worldwide.

"We're seeing the fruits of three decades of deregulation of the
financial markets," said Tonya Hennessey, project director at
CorpWatch, an antiglobalization group in San Francisco. "Because of
that, we've had this complex packaging of securities sold around the
world. There's no choice but to go back to strong regulation."

The fear is that fresh regulations or restrictions on the flow of
capital could make it more costly and complicated to do business in
other countries, said Christopher Meyer, partner at the Monitor Group,
a global strategy consulting firm in Cambridge.

"There'll certainly put a damper on the global financial system," he said.

Global commerce, accelerated by technology and the interlocking of
financial markets, held the promise of increasing wealth everywhere.
For decades, many argued it was doing just that.

As recently as this summer, some economists suggested European
nations and developing countries such as China, India, Russia, and
Brazil were growing so fast - and spawning such large numbers of
middle-class consumers - that they effectively had "decoupled" from the
magnetic pull of the US economy. That meant they could weather the
turbulence roiling the American economy.

But that theory proved to be an illusion. Just as other countries
shared the wealth created by the bubble in US subprime mortgages, as
overseas banks snapped up assets backed by those loans, they're now
sharing in the panic caused by the bursting of the bubble.

"We're all in this together," said Harvard's Bower. "And we're all
connected through the financial markets and through our trade
relationships. It turns out that financial institutions in other
countries had invested in our instruments. Why on earth the banks in
Iceland would invest in US subprime mortgages is something we'll find
out."

While the web of global connections is being sorted out, the
trans-Atlantic blame game already has begun. Foreign leaders have been
carping about US financial stewardship in recent days, even while
calling for more collaboration to resolve the financial crisis.

Russian President Dmitry Medvedev said US "economic egotism" was a
contributing factor. French Economy Minister Christine Lagarde,
referring to the collapse of a US investment bank, said, "We're not
going to tolerate a Lehman Brothers scenario." And British Prime
Minister Gordon Brown, in an implicit criticism of US actions, said
Britain had "led the world" with its financial rescue plan.

So far, leaders have stopped short of threatening to dismantle
global business ties. But even before the recent financial contagion,
trade deals were increasingly unpopular in countries where workers
complain jobs have been shipped abroad.

In the United States, Congress has not renewed the president's "fast
track" authority to negotiate new trade agreements. President Bush has
been unable to conclude bilateral trade deals with Colombia and Panama.
And the so-called Doha round of talks conducted by the World Trade
Organization, aimed at lowering barriers to international commerce,
have failed to produce agreements.

"They're going nowhere now," Alan Tonelson, research director at the
US Business & Industry Council, a Washington business group that
has been critical of US trade policies, said of the proposed new
international trade pacts. "They're dead in the water."

Last month, a report from the council said the most globalized
industries in the United States, such as manufacturing, agriculture,
and mining, saw cumulative growth of 38.4 percent over the past decade,
just over half the 66.8 percent growth of the entire US economy.
Industries unaffected by global trade, such as healthcare,
construction, and personal services, grew 73 percent.

"When you see that our most globalized sectors have lagged behind
the economy as a whole, that tells me that our globalization policies
have failed the economy," Tonelson said.

But many think global business has passed the point of no return, even if governments tinker with its regulatory structure.

"Our global economic infrastructure is out of date," said Magid, the
Brandeis business dean." I think you'll see a period of retrenchment,
the development of new rules and regulations. There's going to be a
pause. Whether it's good or bad, it's needed."

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